What is the Buyer Representation Agreement (BRA)?

Last Updated on January 24, 2024 by CREW Editorial

The search for your dream home is an exciting, albeit frenzied, endeavour. It is filled with endless possibilities; do you want to live in the city or suburbs? Will you live in a condominium, townhouse or a detached home? This is essentially the fun part of home buying before you become unnerved by formal Realtor language and daunting paperwork.

After making the initial decision to buy a property, the next step would be to seek out a Realtor. Almost every prospective buyer looking to enter the real estate market will require the assistance of real estate professionals. They are the experts in the industry, and without them, home buying and selling would be a far more complex process. When you secure a real estate agent and begin to search for homes, the agents will eventually ask you to sign a Buyer Representation Agreement (BRA) prior to putting an offer down on a property. Although it sounds intimidating, the contract is ultimately in the best interests of both the buyer and the real estate agent. Having said that, it is important for you to understand the terms and clauses of the agreements before you sign one.

As a buyer, you need to stay informed and educated throughout the entire home buying process. After all, this will be is your home so you will want to be knowledgeable and informed on the entire process. Even it can be challenging to put your furniture shopping on the back burner when a Realtor is asking for a signed buyer representation agreement, it is crucial to do your research before both parties consent to this contract. Ask questions. Seek clarity. Negotiate if you read something you do not agree with.

We have compiled some key information on everything you need to know about a Buyer Representation Agreement. Give it a read, make a decision on whether you want to sign and then get back on track to securing your dream home! 

What is a Buyer’s Representation Agreement?

A Buyer Representation Agreement is a law-binding document that establishes a formal working relationship between a home buyer and the buyer’s representative. The contract comprehensively details in writing the services provided by the Realtor, as well as any expectations the agent may have of the buyer in return.

The language used in the document is formal in nature and homebuyers should ensure they comprehend the terms of the agreement. This is a great opportunity to clarify expectations, develop a relationship with your agent and most importantly, elevate the services you will receive.

A buyer representation agreement (BRA) is always signed prior to putting in an offer on a home.

 

Five questions to ask yourself before signing a Buyer’s Representation Agreement
 

Question 1: Is the information on the buyer representation agreement correct and accurate?

The agreement should be sure to include the following sections:

• Property Type (Commercial/Residential)
• Location of the Home (City, Province, Country)
• Names of Brokerage and Home Buyers
• Closing Date

Question 2: Am I happy with the length stated in the agreement?

The representation agreements should clearly outline the time period for which it is valid:

• A buyer representative agreement (BRA) is typically valid for a time period of 90 days and rarely exceeds six months.
• If the period of time exceeds six months, you will also need to initial the agreement document.

Question 3: Do I understand how my real estate agent’s commission will be paid?

Before signing the agreement, the client should know what the monetary expectations are between the buyers and the agent

• The commission number is typically 2.5% for the buyer’s salesperson.
• Usually, the seller pays the commission, unless the property is being sold by the owner, in which case the commission would be taken out of the sold price.
• During the search for homes, if the listing states a lesser commission than your agreement, you are responsible for paying the difference.

Question 4: Do I understand the terms of the holdover clause in the BRA?

There should be one clear section in the Buyer Representation Agreement (BRA) regarding the holdover clause:

• Holdover clause is the period after the buyer representation agreement expires that commission will still need to be paid to the broker if the sale of the property is done directly through the seller.
• The order typically lasts 30 to 90 days after the buyer’s representation agreement’s expiration.

Question 5: Is my agent only representing me?

There should be transparency and agreement between the client and salesperson in regards to who the broker is representing in this deal:

• Multiple representations happen when the real estate agent represents both the buyer and the home seller in a transaction.
• In this case, no information will remain confidential between the two parties in the real estate transaction.
• In Ontario, a multiple representation agent or broker is required to disclose information to both the buyer and seller, and receive written consent from all parties.

 

The pros and cons of signing Buyer Representation Agreements (BRA)

The pros of signing a BRA

1. The Buyer Representation Agreement (BRA) is a negotiable form. It gives you the opportunity to outline your wants and needs for a property. If there are reasons why you, the client, are not comfortable with the details and services outlined in the buyer representation agreement, it can be addressed with the agents directly.
2. The real estate agent and brokerage must act with you. By signing the Buyer Representation Agreement (BRA) form, you become clients rather than customers. This means the real estate agents exclusively represent you (unless you agree otherwise) and ensures your information is kept private from the seller. In turn, your brokerage must also share with you details of the seller’s financial position, the home’s true value and details regarding the commission split. This is enforced by The Real Estate Council of Ontario (RECO).
3. The real estate agent acts as your advocate. Home buying can be a stressful endeavour, which is why it is important to solidify your relationship with a brokerage and real estate. If you run into a problem, agents will provide you with the right advice and service to ensure you’re making the best decision.
4. The document provides clarity on expectations. When dealing with a real estate salesperson in the purchase of a home, it is helpful to have a legal contract. If there are any reasons for concern or disagreement down the line, it helps provide clarity and order about what was expected from both parties.
5. The document lays out commissions. All information regarding commissions and fees will be made aware to the clients in the BRA. The Real Estate Council of Ontario (RECO) enforces a Code of Ethics that prevents a representative from providing false information. The commission fees stated are standard and in accordance with the RECO.

 

The cons of signing a BRA

1. It limits you from signing the purchasing contract of your home. The only negative of this step is just one of personal satisfaction. Your brokerage will provide their service to ensure your offer and the remaining
2. It limits you to one agent and brokerage. There have been instances where a broker has gone MIA in the midst of the customer searching for their dream home. It’s always best to do your research on a real estate agent so you can make sure you will receive the services you deserve.
3. It limits your options for that time period and prevents you from a private sale or deciding to go through a new home or condominium development. It happens – once in a while, it’s just more beneficial for you, the client, to purchase a home through a private sale because you know the sellers directly. Just understand that once a BRA is signed, your relationship with the real estate agent and brokerage supersedes the one with the seller.
4. You could be locked into an agreement regardless of your conflicting personalities. Sometimes the relationship between the real estate agent and the customer/client is less than ideal. In the search for a home, there could be a number of reasons for a clash of personalities. Be sure to choose agents who respect you as a client and are willing to put their customers ahead of their ego.
5. The Indemnification Clause means the agent is not liable for any physical condition of the property not disclosed or verified. As a customer making a very large purchase, it’s disheartening to know there may be obstacles in your endeavour to obtaining the perfect home.  

COVID-19 clauses in your Buyer’s Representation Agreement (BRA)

Because of the ongoing COVID-19 pandemic, a “Schedule B” has been put forth by RECO. This protects the interest of buyers in the event that there are penalties resulting from delays to the closing date due to COVID-19. The clauses are listed below:

Paperless Closing

All documents and agreements, including lawyers, are to be signed electronically

Delay of closing and title insurance

In the event of closures due to the pandemic, this protects against any delays by the Provincial Government to the Land Titles system

Delay of closing if third parties are unable to close

The closing date is automatically delayed up to 10 business days if the buyer’s bank, mortgage lender, property insurance, or Land Registry office is forced to stop operating due to COVID-19. If the delay exceeds 60 days, however, then either the buyer or seller can choose to terminate the home purchase and sale agreement.

Automatic delay of closing if either party is quarantined and cannot sign

If either the buyers or sellers are quarantined as a result of COVID-19, the closing date will automatically be extended for 30 calendar days. This protects both the sellers and the home-buying clients.

Frequently Asked Questions
 

1. How is a Buyer Representation Agreement presented?

To protect everyone involved, the is required in writing with a signature in order to protect everyone involved.

2. When is the best time to sign a Buyer Representation Agreement?

Typically, a BRA is signed prior to working with the real estate agent.

3. What happens if I don’t want to sign?

While you are able to choose to be customers rather than an agent’s clients, there are stark differences in regards to your representation. The BRA is created to protect and promote the client’s best interests.

4. What is a holdover clause?

This clause means that even if your BRA expires, and you purchase your home within 90 days of the expiration, you must still go through the original agent in the purchase of your home.

So, should you sign The Buyer Representation Agreement?

Now that you understand what a Buyer Representation Agreement is, you have to make the crucial decision on whether to sign. It is important to remember these documents are put in place to protect both the client and the brokerage during the process of buying a home.

Ultimately, the BRA is standard practice within the RECO. Before offering their full services and prior to you putting in an offer on the home of your dreams, a brokerage and Realtor will always require you to sign and initial one.

In order to make sure you’re receiving the services you were verbally promised, it is also in your best benefit to understand and address the terms of your buyer representation agreement. As long as the author of the document (the brokerage) and the signer (the client) agree, you’re more than likely on the right track.

Congratulations! You’re one signature away from obtaining your new home.